OIL: Nigeria Cuts October Crude OSPs

• No Obvious trigger for the sudden selling in the French OAT, but there might be some OAT/Bund spread at play, since it is widening towards the 80.00bps handle.
• The April high and highest print since January stands at ~79.83bps.
• OAT is now heading towards the just mentioned 121.54 level, ahead of the Yields.

(Chart source: MNI/Bloomberg Finance LP).

• French OAT is getting hit here, testing session low, some 3k sold in the past few minutes, all cumulative Volumes.
• Yesterday's low is at 121.54, but initial level is still eyed at 3.550% = 121.39, followed by 3.631% = 120.61 (highest Yield print since Nov 2011).
• Other Bonds (Germany and US Treasuries) are getting dragged lower by France.

Note that Bunds haven’t shown much in the way of sensitivity to the technically uncovered 7-Year auction that came this morning.

• This added to the recent trend of softening demand at German primary offerings, with last week’s 30-Year offering also being technically uncovered (albeit with that instance coming within a dual tranche auction).
• Desks pointed to the potential for softer demand ahead of today’s auction, with the 7-Year zone falling between the demand sweet spots of 5s & 10s, making for fewer natural buyers in this area of the curve (as well as a more cumbersome/less exact hedging process).
• This, combined with focus on the resumption of more meaningful supply after the summer break and the incoming increase in German issuance, likely factored into soft demand at today’s offering.